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Economy in Brief

U.S. New Home Sales Unexpectedly Decline as Pricing Power Wanes
by Tom Moeller  July 24, 2015

New home sales during June declined 6.8% to 482,000 following a revised 1.1% May drop to 517,000, initially reported as 546,000. April sales also were revised lower to 523,000 from 534,000. Sales were at the lowest level since November and 11.6% below the February peak of 545,000. The latest decline contrasts with Wednesday's report of a 3.2% rise in sales of existing homes. The latest figure disappointed expectations for 549,000 in the Action Economics Forecast Survey. Sales are quoted at seasonally adjusted annual rates.

Home prices remained under pressure. The median price for a new home during June improved a scant 0.5% (-1.8% y/y) to $281,800. May's median price was revised down, however, to $280,500 from $282,800. June's price was 6.9% below the peak of $302,700 reached in November. The average price of a new home declined 2.1% last month to $328,700 (-2.8% y/y) from $335,900 in May. The latest was down 12.0% from the December peak.

Sales results continued to vary around the country. In the West, sales declined 17.0% from May to 112,000 (+10.9% y/y). It was the lowest sales level since last July. Sales in the Midwest were off 11.1% (+5.7% y/y) to 56,000, the least since February. Sales in the South fell 4.1% to 282,000 (+23.7% y/y), the lowest level since December. To the upside, sales in the Northeast posted a 28.0% gain (23.1% y/y) to 32,000. They remained, however, 15.8% below the peak reached in May of last year.

The inventory of unsold homes increased to 215,000 (8.6% y/y). The months' sales supply of new homes also increased m/m to 5.4 months, the highest level since November. The length of time to sell a new home nudged up from June to 4.0 months but was down from 14.0 months at the end of 2009.

The data in this report are available in Haver's USECON database. The consensus expectation figure from the Action Economics survey is available in the AS1REPNA database.

Millennials, Baby Boomers, and Rebounding Multifamily Home Construction from the Federal Reserve Bank of Kansas City is available here.

U.S. New Single-Family Home Sales (SAAR, 000s) Jun May Apr Jun Y/Y % 2014 2013 2012
Total 482 517 523 18.1 439 429 369
  Northeast 32 25 14 23.1 28 30 28
  Midwest 56 63 71 5.7 60 62 48
  South 282 294 316 23.7 244 232 194
  West 112 135 122 10.9 108 106 97
Median Price (NSA, $) 281,800 280,500 292,000 -1.8 283,775 265,092 242,108
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